Cover story: magazine publishers in trouble with the ACCC

Earlier in September, Justice Dowsett of the Federal Court handed down a decision ordering three publishing companies (‘Elite Publishing’) to pay total penalties of $400,000 for misleading and deceptive conduct and unconscionable conduct. The companies’ director, Mr Andrew Clifford, was also ordered to pay penalties totalling $100,000.

Elite Publishing’s MO was to contact small business by phone, suggesting they had already paid for or agreed to pay for advertising in one of the companies’ magazines. Elite Publishing then sent the small businesses a document which the business was encouraged to sign, apparently in order to receive complementary copies of the magazine.

Elite Publishing then relied on this signed document as proof of an agreement to buy advertising between them and the business. This was followed by a demand for payment for the advertising. The companies and Mr Clifford admitted they had engaged in misleading and deceptive conduct and unconscionable conduct. The companies admitted to engaging in harassment and coercion in pursuing payment from some businesses. In addition, their misleading representations involved suggesting that 500 copies of magazines carrying the business’ advert would be distributed, when Elite Publishing never intended to distribute 500 copies of the magazine for that purpose. The ACCC’s news release has more details on the case.

There is no clear definition of what constitutes ‘unconscionable conduct’ in the ACL. Essentially, the ACCC suggests, for unconscionable conduct, that you’re looking for more than ‘hard commercial bargaining’, for something that ‘should not be done in good conscience.’ On 12 September this year, the ACCC released a Business Snapshot on Unconscionable Conduct which contains guidance on what unconscionable conduct is and tips for avoiding becoming a victim of unconscionable conduct as well as avoiding engaging is such conduct.

As the Elite Publishing case demonstrates, unconscionable conduct can occur in a business to business context as well as a business to consumer context. For companies providing financial products and services, there are also unconscionable conduct provisions in the ASIC Act 2001.